Or, better, use a current pip as the high level interface and which will use setuptools under the covers.

[Longer answer for OP's specific problem]:

You don't say in your question but I'm assuming you upgraded from the Apple-supplied Python (2.5 on 10.5 or 2.6.1 on 10.6) or that you upgraded from a python.org Python 2.5. In any of those cases, the important point is that each Python instance has its own library, including its own site-packages library, which is where additional packages are installed. (And none of them use /usr/local/lib by default, by the way.) That means you'll need to install those additional packages you need for your new python 2.6. The easiest way to do this is to first ensure that the new python2.6 appears first on your search $PATH (that is, typing python2.6 invokes it as expected); the python2.6 installer should have modified your .bash_profile to put its framework bin directory at the front of $PATH. Then install easy_install using setuptools following the instructions there. The pkg_resources module is also automatically installed by this step.

Then use the newly-installed version of easy_install (or pip) to install ipython.

easy_install ipython

or

pip install ipython

It should automatically get installed to the correct site-packages location for that python instance and you should be good to go.